Board plans to meet to discuss a sale of the bulk of the french builder of power plants and trains to ge. Matt campbell joins us now with the very latest. We heard about the deal yesterday. It was a great bloomberg exclusive which you helped to break. Give us a sense of where the different parties are standing. What seems to be taking shape is a significant transaction that would leave a small part of alstom behind. The transport business which makes Rolling Stock would actually be separated from Everything Else alstom does. Transport is about 20 to 25 of sales. Alstom ismajority of being taken over by General Electric according to people familiar with the situation. But of this is official yet we expect an announcement could come soon. Even in the next few hours. The fact that the unit is being left to one side may allow a political way out for the french government. This is a trophy asset for the french government. They are not tacking over the trains. There was some hint the french government was concerned. This is an interesting bit of a lyrical kung fu. I suspect ge would love to take over all of alstom. They are making this concession because the french government says they can now go to the voters and say, we didnt give it to the americans because that would be a daft thing to do. Rest of what alstom does is, it is hard to get the voters excited about gas turbines and electrical distribution infrastructure. Trains are something everyone can identify with. This is a clever bit of structure. This is a thing that the french really like. Are therese of likely to be any counter bids . That is an excellent question. Alstom is clearly in play. This is something every Big Industrial company is going to have to think about. Alstom is not all that valuable at this point. The whole market cap is about 10 billion euros which for a really enormous french industrial player is not very much money. While that is not something we are aware of yet, it is a possibility. More broadly, at siemens in munich and abb in zurich, they have to be thinking about how they are going to respond to this dramatic move by ge on their own turf. Do you have any idea about what sparked this . What generated the initial idea . I read something about how organs was quite keen bouygues was quite keen on the concept. Immelt was talking about smaller numbers. T being the chief executive officer, said that ge will spend between 1 billion and 4 billion on acquisition. This is obviously much larger. He said in exceptional circumstances they would spend more. Ge has 57 billion in cash held outside the u. S. That is not money that can be repatriated due to tax penalties. It has to use that money productively. Yesterday we were talking about french protectionism. We were expecting the government to make a little bit of noise. The minister of industry says that france is working on other alstom solutions. Is this rhetoric . Do we think that we could have a white night coming in from france . Is there anyone big enough to take over the assets . It is hard to see who could do Something Like this. Industry minister is well known for speaking a little bit out of turn on the sus ex on ubjects. What he says does matter. It doesnt always mean that we have to listen to every single syllable of it. There is certainly something to that and i think we can expect there will be a bit of pushback and france. Certainly very colorful politician. Matt, thanks very much indeed. Now, lets get you to what else we are watching today. A conflict in ukraine escalates. Ryan chilcote joins us with the very latest. You are on sanctions watch. Are we getting any closer . We understand that gazprom is preparing for possible sanctions. Quite possibly. President obama is in asia at the moment on his asian tour. We have just learned he is going to have a Conference Call with european leaders today. To encourage them to go forward with sanctions. One senior obama official telling us the United States is quite frankly frustrated with several european countries, particularly germany and italy which the u. S. Sees as reluctant to impose more sanctions against russia. This official telling us if the u. S. Is unable to convince the europeans to go further, it may go it alone and impose these sanctions unilaterally. That news comes following secretary kerrys comments yesterday where he said if russia fails to deescalate the situation in the east of ukraine, then it will be a very expensive mistake. Have a listen. The window to change course is closing. President putin and russia face a choice. If russia chooses the path to deescalation, the International Community will welcome it. If russia does not, the world will make sure that the cost for russia will only grow. As president obama reiterated today, we are ready to act. We have just heard from the Russian Foreign minister. He said russia is prepared to but it to deescalate has to be synchronized with ukrainians. He wants to see the ukrainians take more measures before russia does its part. Perhaps some conciliatory comments there. It would be ideal from the u. S. Point of view to have the europeans on board with further sanctions. Do we have any idea about what these sanctions could be . Francine was hinting at that earlier. Gazprom bank, we have been told by treasury officials, is one bank that might be targeted. We have spoken with gazprom bank and understand that gazprom bank, russias thirdlargest lender, that they are preparing themselves for possible sanctions. It is mostly a Corporate Lending ,ank that works with gazprom the Worlds Largest gas producer. That is one possible target. Another is russias Development Bank. During the financial crisis it was the bailout and that the government used to help some of russias big businesses when they got in trouble. Neither of these banks have real cachet with the russian population. They are not really involved in butumer lending or deposit they are systemically important to the russian Banking System and very important to the kremlin. Watch that space. Those would be possible targets we are told by u. S. Officials. Ryan, thank you so much. Ryan chilcote with the latest on these possible sanctions between russia, ukraine and the eu. U. S. Communications regulator has circulated draft rules for Net Neutrality. We are going to talk about that right now. It could create a two Speed Internet or a business class. This is going to affect every company that uses the web. Caroline hyde has more. Talk to us about what is happening in the states. The u. S. It all goes back to january. The u. S. Court of appeals said the regulations for open internet arent good enough. It still meant that service , those you use to access the internet, could legally slow down certain websites, block certain websites. If they felt they were too much of a competitive threat, netflix springs to mind. They werent saying they were doing it, they were saying they were able to do that. With comcast also buying time warner, the fact that you had fewer internet providers became a concern. The fcc looked to tackle this. The draft regulations they are circulating arguably dont go far enough. That is what many are feeling. They say netflix has been very vocal about this, saying that you are still allowing content betterrs to pay for access to the internet, to speed up their services so that when you are downloading a video you dont get it all jumbled, you get a pure signal. Netflix already has paid millions of dollars to comcast for this access. They have said, this isnt fair. Consumers are already playing paying a lot for their services to be good. What about Smaller Companies that dont have these financial ammunitions to give that sort of money to comcast for Better Internet . This starts from the premise that everyone should have the same access, whether you are that Small Company or a big company. But the internet has changed so significantly. That is why these rules are being rethought or rewritten. Two things spring to mind. Comcastir, at t and feel that they are having to do all the investment in the infrastructure of the internet. Shouldnt it be shared . Shouldnt it be the likes of facebook that help them speed up . We are using more and more data. Shouldnt it be shared . Secondly, what about the eu, what about asia . If the u. S. Is having these watereddown regulations, what does it mean for us . Pushed for aally more flat and open market three weeks ago, the eu voted for Net Neutrality. We now have Net Neutrality in europe. What if those u. S. Regulations start to filter through into europe . This is the key concern. Many are wondering, what does it mean for asia, europe . Thank you so much, Caroline Hyde with the latest on Net Neutrality. Now a bloomberg exclusive. Bank of america could be ready to pay out over 13 billion to resolve investigations into the sale of Mortgage Bank bonds. Jonathan ferro has all the details. This is a settlement for the ages. The scale is enormous. That is how much the prosecutors might be looking for. The numbers keep getting bigger. Bank of america is just one of eight banks under investigation by the justice department. This was in the runup to the financial crisis surrounding the sale of bonds. We know what happens to a lot of those mortgages and bonds. Bank of america, the costs are piling up. If they do settle for 13 billion, that would be on top of the 9. 5 billion they paid last month. This would eclipse jpmorgans fine. It is a massive amount of money. The ceo has spent more than 50 billion since the financial crisis to resolve these claims. Are we close to the end . What we are seeing is increasing momentum. These issues have been going on for six years. Not just for bank of america, but Credit Suisse as well. 50 billion. This is a huge amount of money. It is the equivalent of Societe Generales market capitalization. It is the equivalent of annual sales at cocacola. I think about banking in its entirety. Is it Financial Markets, geopolitical . Many people say the Biggest Issue has been litigation. The whole just keeps getting bigger and bigger. Thank you so much, Jonathan Ferro with the latest. All banks will be watching to see. Up, will europes economy remain unscathed by harsher sanctions against russia . That is the subject we are going to discuss next. Welcome back. German chancellor Angela Merkel has promised the Prime Minister to meet today to discuss the crisis in ukraine. Russia has been downgraded by standard poors. Joined by theent head of emerging markets research at standard bank. Lets start off talking about the russian economy. Sanctions look like they are becoming a rolling story. We are going to likely get more of them. We have got a downgrade this morning. Walk us through the next six months, 12 months for the russian, me. It was already very challenging. What shaw had russia had weak growth anyway. There is just no growth. Russians are not investing in their own economy. This story, the ukraine story, the imposition of sanctions means that less russians will invest in their own economy. Fewer foreigners will want to invest. Overall, it is bad for the longterm growth story in russia. And yet it seems that president putin is brushing it off. If you look at the conversations we were having two or three weeks ago, the eu, the u. S. Will come hard, the russian economy cant sustain any more sanctions , and it is getting penalized but not enough to care about it. You have to understand putins rationale for going into ukraine. That is legacy issues. Longtermabout his place in russias history. It is about recreating a greater russia. That is what i think this is all about. You could also argue that it is about distracting from the problems in the russian economy. It is a classic foreign adventure. He really doesnt care that much. I think in the longterm it will be very damaging. Lets talk about the ukrainian economy. Imf money coming in, that is just a stopgap, isnt it . The problem with the imf money and the assumptions that it only this program, holds together if ukraine holds together. Separatists succeed, russia succeeds, the numbers dont stand up. Ukraine is theth industrial heartland of ukraine. Ukraine, the administration is not sustainable. They will be able to maintain. Bottom line, the imf would have to put a lot more on the table. How much more . Is it double the 17 billion . In the end, you end up with restructuring scenarios. To what magnitude are we talking about . How should we think about this . If you are going to do a restructuring, you may as well resolve the problem at its core. Eastern and south ukraine is a substantial part of the ukrainian economy. You shrink the rest of the economy which would have to sustain a very High Debt Service burden. It would make sense to clear the decks pretty aggressively. Are you expecting more sanctions . We know that two russian banks are preparing for sanctions. Is there an elegant way for this to go or for tensions to be downgraded . I dont see an easy way out. It is difficult to see a resolution in ukraine. The two sides one very different things. Opinion polls show a great majority of ukrainians want european integration. Russia wants to stop that. If russia can stop that he wants eastern and south ukraine. He wants to divide the country. More autonomy. Ukrainians dont want that. Opinion polls dont show a great deal of support for federalism. You could ask whether the russians have really been genuine. Do they really want federalism . Or do they just want to break up ukraine . What is the other side to breaking up ukraine . I get the nationbuilding stuff. If you look at the opportunity versus the cost, the something you can play at home politically and maybe have a little more of a buffer and create different arguments. The cost would be enormous. Is there a way that putin can get what he wants without breaking up ukraine . The vision was the Eurasian Union but that is not realistic. If putin has decided that is not going to happen, then plan b may be taking bits of ukraine that can make a great russia look interesting and sustainable. This is the big vision. You talk about the problems with the russian economy, i argue that putin should be focusing on those. Instead, what he has done is this distraction. This is the focus for him. The easy way out. Tim, thank you so much for all of that. We are back in a couple of minutes. Lets give you a quick market check. Takenle bit of risk being off the trading table at the end of this week as we go into what could be a volatile weekend politically. Russia, ukraine and what will the americans try to get the europeans to do . Stocks are still overall, about 0. 7 . Deals have been the driver of the week. Glaxonovartis, possibly gehouston. Politics is the real capture. What is that doing to the currency markets . Begin a Slight Movement into yen. It is not a dramatic move but youre looking at a oneweek high in terms of dollar yen. 102. 25. A couple of companies that are working that are worth focusing on. We will broke into these. America coming back from a rebound. Energy under pressure. Back to you. Still to come, suite success. The ceo of the bakery of dreams about expanding his bakery empire. Francine is not excited at all. Also coming up, how the cupcake craze pays. You will hear from the founder of the Hummingbird Bakery about how he got britain hoped on red velvet. Francine is going to be tweeting cakes, cakes, cakes. Hopefully i will be eating cakes but you can follow us on twitter. Welcome back to the pulse live from bloombergs European Headquarters in london. I am Francine Lacqua. U. S. Prosecutors are seeking a record 13 billion fine against bank of america. The case involves the banks sale of bonds backed by home loans in the lead up to the 2008 financial crisis. S p has cut russias Sovereign Rating. It is now at the lowest investment level. The country could face further downgrades if the west pursues further sanctions. John kerry is warning russia that time is running out to comply with deal to ease tensions in ukraine. That is as Russian Forces begin new exercises near the ukrainian border. Ukraine is overshadowing president obamas tour of asia. He is holding a Conference Call today with european leaders to discuss the crisis. Our White House Correspondent is also traveling with the president. Margaret, thanks for joining us. What can we expect from this call . At this point, the white house is in the position of trying to nudge european leaders along to attach more names to these sanctions. You heard the president yesterday saying, we have got new sanctions teed up but i recognize that putin may not respond to those either. He is starting from a pessimistic position with europe. Very well said. Talks on obama containing north korea. What you are seeing is a real test of the president s suggestion that a diplomatic multilateral approach is the way to go. The white house was really hoping a couple years ago that kim jongun would be the potential for a reset with north korea. Instead what they are seeing is north korea firing 90 rockets in the last month, ramping up activity at its nuclear test site. They aret that preparing for a Fourth Nuclear test. None of this is what the president wants to be doing here. Thank you so much, margaret for the update. Guy, over to you. Thanks very much indeed, francine. Amazon and microsoft out with results overnight. Lets find out what is going on. Caroline hyde, Jonathan Ferro